Former Prime Minister Helen Clark has reacted with shock to a business award given to India's top tobacco company.

Clark, who is now head of the United Nations Development Agency, was at the ceremony where India's largest cigarette maker, ITC (formerly Indian Tobacco Company), won a prize for improving the environment and removing poverty. The award was supported by her agency.

This drew an angry reaction from a leading Indian health advocate who termed it a travesty of justice.

In New York, Clark released a statement to explain her position.

"I have worked tirelessly throughout my career to achieve a smoke free society in New Zealand, and was, thus, shocked to learn that a World Business Development Award, supported by UNDP, was given to a company which derives a substantial proportion of its profits from tobacco," she said.

"Unfortunately the criteria for the World Business Development Awards did not exclude projects implemented by companies from certain sectors like tobacco. This has clearly been a serious oversight. "

Clark said UNDP would review its rules and regulations and ensure than an incident like it never happened again.

"UNDP will not participate in these awards in the future unless companies like this are excluded," Clark said.

"I retain my strong commitment to anti-tobacco policies and will continue to fight for the health and well-being of citizens in New Zealand and around the world."

Pranay Lal of Union Southeast Asia, a lobby group fighting tuberculosis and lung disease, yesterday said the award was "possibly the biggest travesty of justice even by the UN and the World Bank's weak ethical standards....

"What is tragic is that Helen Clark, a responsible prime minister and wife of a respected public health expert could not have given this award in New Zealand or any other developed country." Lal said.

Clark is married to Auckland University public health specialist Peter Davis.

ITC's chairman, Y C Deveshwar, accepted the award.

"I receive this award with humility and pride, on behalf of the hundreds of thousands of tribals and poor farmers whose lives have been transformed by ITC's Social and Farm Forestry initiative," he said.

* This story has been edited to reflect that Clark did not present the award. She did attend the ceremony.